London close: Stocks slip amid concerns over US-China trade and Brexit

Tue 08 Oct 2019

LONDON (SHARECAST) - (Sharecast News) - London stocks finished in the red on Tuesday as optimism over upcoming Sino-US trade talks faded, but a weaker pound kept a lid on losses even as hopes of a Brexit deal dimmed.
The FTSE 100 was down 0.76% at 7,143.15, while sterling fell 0.66% against the US dollar and by 0.53% versus the euro to 1.2204 and 1.1146, respectively.

IG senior market analyst, Joshua Mahony, said: "The pound has slumped into the lowest level seen in over a month, as the blame game continues amid leaks of a conversation which saw Angela Merkel lay out a plan that involves Northern Ireland remaining within the customs union.

"If proven correct, these comments point towards a rejection of Johnson's plans of a customs zone, only to propose an unthinkable plan to split Northern Ireland away from mainland trade deals and standards. The big question is whether this is the official stance of the EU, with confirmation essentially pointing towards a likely no-deal Brexit. It looks likely that the electorate will have to decide between a conservative-led no-deal Brexit and a Corbyn-led second referendum; neither of which the markets would take particularly well to."

Weakness in the pound meant the FTSE was able to keep losses to a minimum while its European peers fell more heavily as relations between the US and China soured just days before top negotiators from both countries were due to meet for trade talks in Washington.

According to reports, China suggested that it would retaliate after the Trump administration put eight Chinese technology companies on a blacklist overnight over alleged human rights violations against Muslim minorities.

Washington's decision followed reports that Beijing would not allow any discussion of intellectual property issues, thus rendering a key plank of the Trump trade talks irrelevant, and that the Chinese trade delegation might cut its stay in the US short by one night, from Saturday to Friday.

On the flip side, the editor of China's state-owned Global Times said the Chinese delegation would be one of the largest, a signal that Beijing did want to reach a comprehensive deal, but that China was not sure whether the US would hike tariffs on the country's imports again.

A US tariff of 25% on $250bn-worth of Chinese exports was set to rise to 30% on 15 October.

In equity markets, shares of London Stock Exchange slumped after Hong Kong Exchanges and Clearing said it was ditching its 32bn offer for the company, having been unable to engage with management.

EasyJet shares flew lower as the budget airline said it expects annual profits to be at the upper half of its guided range but that total revenue per seat for the year will drop around 2.7% and total costs will rise 12%.

PageGroup was under pressure after the recruiter warned over its annual profits, citing slow German growth, Brexit, the Sino-US trade spat and protests in Hong Kong. Small-cap recruiter Robert Walters added to the sector gloom as it posted a drop in third-quarter UK profit and warned that full-year pre-tax profit would be flat, pointing to many of the same woes as Pagegroup. Hays also lost ground.

TalkTalk was knocked lower by a downgrade at Societe Generale.

On the upside, Polymetal and Rio Tinto were boosted by upgrades to 'buy' at Renaissance Capital, while Electrocomponents rose as it said like-for-like sales pushed up 5% in both the second quarter and the first half.

Market Movers

FTSE 100 (UKX) 7,143.15 -0.76%
FTSE 250 (MCX) 19,200.90 -1.13%
techMARK (TASX) 3,823.78 -0.63%

FTSE 100 - Risers

Polymetal International (POLY) 1,175.00p 2.75%
Fresnillo (FRES) 688.80p 2.07%
Coca-Cola HBC AG (CDI) (CCH) 2,573.00p 1.06%
Smurfit Kappa Group (SKG) 2,444.00p 0.83%
Phoenix Group Holdings (PHNX) 664.20p 0.79%
Relx plc (REL) 1,877.00p 0.67%
Imperial Brands (IMB) 1,841.40p 0.60%
Experian (EXPN) 2,558.00p 0.39%
Mondi (MNDI) 1,548.50p 0.32%
Croda International (CRDA) 4,770.00p 0.29%

FTSE 100 - Fallers

London Stock Exchange Group (LSE) 7,020.00p -5.80%
Whitbread (WTB) 4,009.00p -3.90%
Flutter Entertainment (FLTR) 7,876.00p -3.50%
Tesco (TSCO) 229.80p -3.04%
NMC Health (NMC) 2,495.00p -2.96%
Royal Bank of Scotland Group (RBS) 189.85p -2.95%
Centrica (CNA) 69.38p -2.91%
British Land Company (BLND) 540.80p -2.84%
Land Securities Group (LAND) 820.60p -2.66%
ITV (ITV) 119.25p -2.65%

FTSE 250 - Risers

Sanne Group (SNN) 524.00p 3.35%
Contour Global (GLO) 180.60p 2.50%
Electrocomponents (ECM) 610.60p 1.83%
Vivo Energy (VVO) 117.60p 1.43%
Centamin (DI) (CEY) 117.15p 1.34%
Restaurant Group (RTN) 137.00p 1.18%
Schroder Asia Pacific Fund (SDP) 433.00p 0.70%
Sabre Insurance Group (SBRE) 293.00p 0.69%
SSP Group (SSPG) 612.00p 0.66%
VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 338.00p 0.60%

FTSE 250 - Fallers

Pagegroup (PAGE) 367.80p -11.93%
Finablr (FIN) 143.20p -8.91%
Aston Martin Lagonda Global Holdings (AML) 441.80p -7.96%
Vesuvius (VSVS) 409.00p -5.14%
Riverstone Energy Limited (RSE) 485.50p -4.80%
Bakkavor Group (BAKK) 113.40p -4.71%
Morgan Advanced Materials (MGAM) 239.60p -4.62%
Premier Oil (PMO) 72.88p -4.61%
Rank Group (RNK) 183.00p -4.31%
TalkTalk Telecom Group (TALK) 102.40p -4.30%
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